Market overview

Driving efficiencies

In a recent study1 the construction sector ranked third last amongst 15 sectors analysed for digital maturity, while another report2 found that the sector has historically spent only around 1% of revenues on IT compared to 3.3% as a cross-industry average.

However this dynamic is changing quickly with the AEC software market forecast3 to see a CAGR of 11% to 2020 as businesses turn to technology to drive efficiencies across the supply chain.

BIM driver

A key factor in this shift has been the advent of Building Information Modelling (BIM), the concept of a central digital information model which is accessible to all of the participants of a construction project and which enables real-time collaboration to reduce costs and improve the overall integrity of the build.

The BIM market is growing quickly driven by a heightened focus on cost-cutting and increased project complexity, as well as a raft of government initiatives. In particular a number of European governments, including the UK, the Netherlands, Denmark and Norway, have made its use mandatory in public construction projects whilst others such as Germany look set to follow suit.

Estimates on the size of the market varies, but the BIM segment is expected to reach a value of $8bn by 20204 representing a CAGR of around 13%.

The global Architecture, Engineering and Construction (AEC) industry is in the midst of a paradigm shift. Following decades of underinvestment in the technology needed to support and improve business functions, the market is waking up.

Global recovery

Market growth is also being driven by a robust recovery in the construction market globally with the industry expected to grow by 85% to $15.5tn by 2030, from $8.3tn in 20125. This is being particularly driven by the recovery in developed countries as well as accelerating growth in emerging economies.

The outlook is also strong in Europe with forecasts6 that the market will grow 2.7% during 2017 and then see steady growth in the coming years as robust economies move out of a period of austerity. Growth is expected to be particularly strong in the UK, Germany, Belgium, Austria and Scandinavia.

This improving economic backdrop, coupled with the increasing digitisation of the market under BIM, means the construction software market will be a key market to watch in 2017 and beyond.

1 Accenture Digital Index
2 Gartner IT Key Metrics Data 2014
3 Technavio, Global Architectural Engineering and Construction Market 2016-2020
4 MarketsandMarkets
5 Global Construction Perspectives and Oxford Economics
6 Euroconstruct

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